AUSTIN — The state's insurer of last resort for windstorms is not solvent by most insurance company standards and would find it hard to pay claims if faced with a major storm, the Texas insurance commissioner told lawmakers Thursday.

Lawmakers expressed concern about Texas' entire economy if coastal residents are left in the lurch. One said part of the answer is to assess a small amount on insurance policies statewide if there is a weather catastrophe.

She and some lawmakers cited the ongoing expense of claims - particularly those in litigation - from Hurricane Ike in 2008.

"Depending on what happens with this ongoing litigation that they just don't seem to be able to get in front of, I don't know, we have not done the projection to see when it would be that they would run out of cash," said Kitzman, whose agency has administrative oversight of TWIA because of a troubled administrative and financial past. "But, at some point, they just won't be able to do it if claims continue as they are."

The association has a reserve trust fund with about $175 million in it, plans to add $25 million more and has authority to issue bonds. General Manager John Polak said the association is funded to cover up to $3.5 billion in claims, assuming it can sell all the bonds it is authorized to issue. That is about $1 billion more than Ike, he said. Some lawmakers said the association's ability to sell all those bonds is in question.

The association has raised rates on TWIA customers, but state Rep. Larry Taylor, R-Friends- wood, co-chairman of the oversight committee and Republican nominee to the Texas Senate, said premiums through the association total $400 million annually.

"We could double the premiums," he said. "That's $800 million. You're still not covering the multibillion-dollar loss. And there's no way for that little sliver to ever cover that loss.

"There has to be some spread of the risk, which is the way they pay for hailstorms," he said, suggesting there could be a "fraction of 1 percent" assessment statewide to help pay off a loss in a catastrophic storm.

"It's not going to affect anybody's quality of life," Taylor said.

Rep. John Smithee, an Amarillo Republican who is House Insurance chairman and serves on the oversight committee, asked Polak, "Are we telling people before they buy these policies ... if you do have a claim, we may not have the money?"

Polak said customers are not so informed. Taylor said issuing such notices would be "a crushing blow to the economy" because banks then could not give loans to those insured with TWIA policies.

Smithee asked Polak would happen if claims could not be paid. Polak called it an unanswered question and said there is nothing in the law requiring the state to subsidize TWIA. "We're broke," Smithee said. "We're not much better off than TWIA is, really."